Wisconsin Telecom Policy Needs Update - Discovery Institute
Transcript of Wisconsin Telecom Policy Needs Update - Discovery Institute
SUMMARY
In 1994 the Legislature revised Wisconsin’s
telecommunications law to permit and encourage
competition as a catalyst for delivering new
technologies, improved service quality and choice
among telecommunications providers and ultimately
lower prices for consumers.
Although the 1994 act opened the market to
competitive entry, it contains significant vestiges of
legacy regulation that are no longer necessary to
protect consumers. They also are having the
unintended effect of preventing full competition which
is necessary to stimulate the deployment of new
technologies. By advantaging some providers and
disadvantaging others, legacy regulation acts as a
restraint on competition. Ensuring that consumers reap
the full benefits of competition will require the
Legislature to revise Wisconsin’s telecommunications
law once again to remove these legacy restraints.
In Wisconsin there remain several harmful vestiges of
legacy regulation.
• Pricing regulation, including hidden cross-
subsidies, makes it unprofitable to serve many
consumers. Pricing regulation cannot be
maintained in a competitive market, where
service providers can choose to serve profitable
customers and ignore everyone else. Full
pricing freedom should be allowed, and inflated
intrastate access charges should be reduced.
• Filing requirements give rivals detailed
information about a competitor’s new or
improved services or products. These
requirements should be eliminated.
• Public Service Commission jurisdiction to act on
consumer complaints can lead to inconsistent
enforcement with anticompetitive
consequences. PSC jurisdiction should be
eliminated and consumer complaints should be
handled solely within the Department of
Justice's Office of Consumer Protection and/or
the Department of Agriculture, Trade, and
Consumer Protection.
• Service quality regulation applies only to legacy
technology and results in unequal regulatory
burden and skews incentives for investment.
Service quality regulation – which is also largely
ineffectual – should be eliminated.
• Obligations to serve, usually referred to as
provider-of-last-resort, impose costs on some
providers but not others and are
anticompetitive wherever consumers can
choose between multiple providers. These
obligations should be eliminated wherever
there is competition.
Wisconsin Telecom Policy Needs Update
Regulation hampers ability of telecom providers to create and maintain
jobs and opportunity in Wisconsin
By Hance Haney and George Gilder | November 2010
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Wisconsin’s’ neighbors are taking important steps to
update the regulatory climate. Indiana, Illinois,
Michigan and Ohio have all recently updated their
telecom statutes.
Meanwhile, Wisconsin’s telecommunications providers
remain subject to unnecessary and anticompetitive
regulation which depresses industry valuations and thus
investment.
By simple reforms of outdated laws, Wisconsin can
ignite a spiral of innovation and revival based on new
technologies and services.
Gone is the traditional rationale for utility regulation –
i.e., that fixed landline telephone service is a natural
monopoly. Less than 30 percent of Wisconsin lines are
served by incumbent local exchange carriers subject to
legacy utility regulation.
Continued rulemaking by state public utility
commissions is not only unnecessary but, by distorting
competition, harms consumers and limits deployment
of new technologies. Even when pursued in the name
of “competition,” legacy regulation restricts service
strategy flexibility and creativity needed for real
competition in the Internet age.
This is a moment of truth for Wisconsin. Broadband is
not yet ubiquitous, particularly in disadvantaged
communities and remote areas. Yet every Wisconsin
resident should have access to broadband.
Broadband offers new opportunities to get a job or start
a business. It is most valuable where other
opportunities for wealth creation are least available,
such as in disadvantaged communities and rural areas.
The state can open up new technological opportunities
and economic efficiencies that promise a direct private
market economic stimulus of at least $2.2 billion over
five years in the form of lower prices for voice services,
according to one estimate. According to a report by
Connected Nation, Wisconsin would also experience an
additional $2.6 billion in economic impact annually from
increased broadband availability and use – including an
estimated 50,748 jobs created or saved per year
throughout the state’s economy.
The jobs created or saved are not only in the
telecommunications equipment and services, but also in
manufacturing and service industries (especially
finance, education and health care).
Telephone companies, cable operators, wireless
providers and others are all competing to be the market
leader in broadband, and each firm is anxious to invest
whatever it takes. But first investors must provide the
funding. They will decide which, if any, firms can buy
the necessary equipment and employ the highly-skilled
people who can make it all work.
From a state perspective, regulation is the most critical
factor affecting private investment in broadband. By
removing the statewide cobwebs of regulations that
afflict telecom, Wisconsin can eliminate the possibility
that investment will flow to another state with a lower
risk profile.
COMPETITION PROTECTS CONSUMERS
Today, incumbent telecommunications providers are
facing wide-ranging competitive pressure from Voice
over Internet Protocol (VoIP) providers, from cable
operators, from wireless providers and from other
certificated wireline providers.
Professor Alfred E. Kahn, a former chairman of the New
York Public Service Commission and top official in the
Carter administration, says:
Less than 30 percent of Wisconsin
lines are served by incumbent local
exchange carriers subject to legacy
utility regulation.
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The industry is obviously no longer a natural
monopoly, and wherever there is effective
competition—typically and most powerfully,
between competing platforms—land-line
telephony, cable and wireless—regulation of the
historical variety is both unnecessary and likely
to be anticompetitive—in particular, to
discourage the heavy investment in both the
development and competitive offerings of new
platforms, and to increase the capacity of the
Internet to handle the likely astronomical
increase in demands on it for such uses as on-
line medical diagnoses and gaming.1
Cable phone service
VoIP services were offered by 10 or more providers in
zip codes containing 86.2 percent of the nation’s
households in the first half of 2009, according to the
FCC.2 Only half of one percent of households are
located in zip codes with zero providers.3
Comcast recently became the third largest phone
services provider in the U.S.4 Comcast reports it has
already captured 16 percent of the phone market
where it competes.5 The company believes it can
capture 20-25 percent of the residential market over
time.6 An independent analysis has projected that cable
operators can achieve a market share of 26 percent by
2012.7
Competitive local exchange carriers – a category
dominated by cable operators providing competitive
voice services, but also including other VoIP and
wireline providers – are serving customers in 91 percent
of Wisconsin’s zip codes, according to the FCC.8 The
FCC recently required providers to report service
availability in individual Census Tracts as opposed to zip
codes, and this data will be available soon.9
Meanwhile, competition has pushed down the rates for
bundles of Internet, phone and TV service by up to 20
percent in 2008, to as low as $80 per month, according
to Consumer Reports.10 More recently, the magazine
reported that shopping for Internet, home phone, and
TV service is increasingly a “buyer's market.”11
Although VoIP at one time was not comparable to
wireline service in terms of sound quality, this is no
longer the case. “It’s easy to take for granted the fact
that Internet calls are now as clear as those on
landlines,” according to a New York Times columnist.12
One study estimates that the market potential for cable
voice service over the next 15 years will be 38.8 million
residential and 1.6 million small business subscribers.13
Consumers reported spending $39.80 per month on
average for cable VoIP service, according to a leading
survey, versus an average of $51.50 per month on
telephone service.14 The study projects that over a five
year period (2008-2012), Wisconsin consumers will save
over $345 million in the aggregate based on an
estimated cost savings of $11.70 per residential
subscription per month15 and over $15 million in savings
to small businesses over the same period ($19.70 per
customer per month).16
The study notes that these benefits are dwarfed by the
indirect benefits from the competitive pressure placed
on incumbent traditional phone providers by
competitors. Competition forces the incumbents to cut
their own prices by an estimated $12 per month on
average to avoid losing customers, according to the
study.17 The indirect savings for the residential
customers of the incumbent traditional phone providers
in Wisconsin is over $1.4 billion over 5 years, plus
almost $300,000 for small businesses.18
In Wisconsin, the projected savings from competition in
fixed-line voice services as a result of cable VoIP equal
in excess of $2.2 billion over five years.19
If legacy telephone regulations are not reformed, both
forecasted and potential future savings – beyond the
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five year horizon – could be at risk. Continued
regulation jeopardizes competition which leads to
benefits and savings for consumers by creating artificial
competitive advantages and disadvantages for
providers.
Wireless
Approximately 99.6 percent of the total U.S. population
– and approximately 98.5 percent of the U.S. population
living in rural census blocks – have one or more
different operators offering mobile telephone service in
the census blocks in which
they live, according to the FCC.20
Almost 40% of the nation’s households had only
wireless telephones (24.5%) at the end of last year or
had a landline yet received all or almost all calls on
wireless telephones (14.9%), according to a study
conducted by the Centers for Disease Control of the
U.S. Department of Health and Human Services.21
More than one in four Midwest adults (25.6%) lived in
households with only wireless telephones.22
Another analysis by Citi Investment Research claims
that the number of households that have “cut the cord”
and are wireless-only reached 29.7% at the end of June
and is increasing 5% per year.23
The Economist recently predicted that if consumers
discontinue landline telephone service at the current
rate, “the last cord will be cut sometime in 2025.”24
Meanwhile, the subsidy required for landline service to
remote locations and poor customers will have to rise
as more of the customers who generate those subsidies
discontinue their own landline service, notes the
article.25
The danger, says [one analyst], is that
regulators will introduce new taxes on wireless
and broadband services. Revenues from new
services would then be used to keep an obsolete
infrastructure alive—a recipe for lower growth.
At that point, he says, the “wireline problem”
really will be everyone’s problem.26
Verizon is giving up on the landline business, according
to the New York Times.27 Verizon is aiming to convert
most of its landline operation to an unregulated fiber-
based network capable of leveraging the decentralized
structure of the unregulated Internet to cut costs
sharply…28
There is no basis for claiming that incumbent landline
providers are dominant entities requiring close
government scrutiny. In fact, less than 30 percent of
Wisconsin lines are served by incumbent local exchange
carriers subject to legacy utility regulation.29 However,
we predict a vocal few will continue to demand
traditional utility regulation because they have a vested
interest in the status quo.
The widespread availability of competitive alternatives
to landline phone service limit the ability of incumbent
telecommunications providers to dictate rates or terms
or otherwise injure consumers. Most of their
customers now have a choice of providers.
Comprehensive regulation will actually do more harm
than good by limiting the ability of incumbent
telecommunications providers to improve their
products and services and to adjust their pricing in
response to competition.
Regulatory reform of landline phone service is lagging
far behind wireless30 and cable,31 both of which were
Almost 40% of households had
only wireless telephones at the
end of last year, or had a landline
yet received all or almost all calls
on wireless telephones.
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largely deregulated during the Clinton administration
when they faced far less actual competition than the
telecommunications providers have now.
Even in the absence of market share losses, preemption
of state regulation of wireless services in 1993 came
with the auctioning of additional spectrum because
Congress reasonably assumed competitors would
materialize. The average cost per minute of cell phone
use has fallen from 47 cents in 1994 to 6 cents in
2007.32
The elimination of cable rate regulation in 1996
occurred while cable operators still retained 91 percent
of all subscribers, because Congress saw that new
entrants such as Direct Broadcast Satellite service
providers were attracting customers at a rapid rate.33
Video service offerings expanded as the result of a $145
billion investment by the cable industry between 1996
and 2009 to build out a two-way interactive network
with fiber optic technology.34 This investment was a
direct result of regulatory reform and enabled the cable
industry to become the leading provider of high-speed
broadband service and pioneer combined full-scale
broadband video, Internet and digital phone service
packages.35
NEEDED REFORMS
1. Prevent Direct Regulation of Broadband and
VoIP
Wisconsin exempts wireless services from state utility
commission jurisdiction,36 however there is no express
statutory exemption of broadband or VoIP services.
AB 696 (2009) and SB 469 (2009) confined PSC
jurisdiction to “essential telecommunications services,”
while exempting advanced services.
There is no reason for a utility commission to possess
explicit or implied jurisdiction to intervene in a
competitive marketplace, because competition is a
proven success. To the extent that competitive services
are not expressly exempted from utility regulation, a
state commission is a target for commercial rivals
seeking protection or a regulatory advantage over their
competitors.
Some might argue the PSC can play a vital role ensuring
that affordable broadband is available to all. A recent
U.S. Department of Commerce report noted that 36
percent of American households did not have a
broadband Internet service at home, and that the most
commonly cited reason for not having broadband
Internet access at home was “don’t need” (38 percent),
followed by “too expensive” (26 percent) and
“inadequate computer” (18 percent).37 One of the
least cited reasons was “not available in area” (4
percent).38
Traditionally, regulators have ordered firms to provide
service to anyone upon reasonable request in exchange
for a guarantee of profitability achieved through legal
barriers to competition. A monopoly provider which is
insulated from competition may equalize rates by
requiring consumers who are less expensive to serve to
subsidize other consumers who are more expensive to
serve. These cross-subsidies make service more
affordable for some by over-charging others. Cross-
subsidies cannot be sustained in a competitive market.
Utility commissions also used to attempt to limit the
profit received by telephone companies, such as 11.25
percent on top of reasonably and prudently incurred
expenses. “Cost-plus” or “rate-of-return” regulation
failed and was replaced with “price caps” or complete
pricing freedom in nearly every jurisdiction.
A utility commission could also subsidize broadband by
collecting and redistributing user fees, like the Universal
Service Fund administered by the Federal
Communications Commission. The Universal Service
Fund has been criticized for years as wasteful and
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inefficient. A recent report by the U.S. Government
Accountability Office (GAO) notes that Congress
anticipated that competition and new technologies
would eliminate the need for universal service support
mechanisms, but the explicit fund grew nearly 153%
between 1998 and 2007.39 Reform of the subsidy
mechanisms has been seriously considered on many
occasions but has proven to be politically problematic
every time.
There is little if anything that traditional utility
regulation can do to address broadband adoption
challenges.
State economic development and education
departments can play a valuable role promoting
broadband adoption. The goal of ubiquitous broadband
does not provide a justification for the PSC to retain any
ability to regulate competitive communications
services. In Indiana, for example, the state‘s finance
authority determines underserved areas for purposes of
that state‘s broadband development program.
2. Consolidate Consumer Protection
Cramming, identity theft, noncompliance with the do-
not-call registry, fraud, privacy, spamming,
telemarketing scams, unauthorized charges, etc., are all
examples of real problems consumers face in
cyberspace. Although utility regulation and consumer
protection are related, a utility commission‘s expertise
in network architecture, utility cost allocation or the
principles of common carriage doesn‘t make it better
suited to protect consumers than a state attorney
general.
Utility commission jurisdiction for consumer issues is
redundant since the Department of Justice's Office of
Consumer Protection and the Department of
Agriculture, Trade, and Consumer Protection already
protect Wisconsin consumers and businesses against
fraud, deception, and unfair business practices. Divided
or shared jurisdiction between multiple agencies can
lead to inconsistent consumer protection enforcement
according to the type of service or provider. This could
have anticompetitive implications.
PSC jurisdiction to act on consumer complaints should
be eliminated and handled solely by the agencies that
protect against fraud, deception and unfair business
practices in competitive markets.
3. Eliminate Service Quality Regulation
The PSC enforces service quality rules that are
unnecessary as a result of the widespread competition
that exists today in the age of fiber optics, cellphones
and the Internet.
Moreover, service quality regulation is largely
ineffectual. In 2000, high numbers of consumers
throughout the Midwest complained of lengthy delays
for new phone service or for repairs to existing service
from Ameritech, the parent of Wisconsin Bell. One
attorney speculated that Ameritech was pursuing a
strategy of making itself an attractive takeover target by
deferring investment in the network so as to conserve
cash in order to improve its balance sheet.40
Service quality regulation by the public utility
commissions throughout Ameritech’s Midwest service
territory failed to prevent the deteriorating service
quality. FCC “pro-competition” policies, which – among
other things – deregulated Ameritech’s competitors but
not Ameritech itself, undoubtedly contributed to
underinvestment by Ameritech.
The market has changed dramatically since the year
2000. The reliability and sound quality of wireless and
VoIP have steadily improved even though these services
are not subject to any service quality regulation. As
previously noted (p. 3), VoIP calls can be as clear as
those on landlines.
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If service quality regulation had been applied to these
emerging technologies they may not have been able to
attract sufficient investment for deployment.
Providers have every incentive to compete on price and
quality in the fully competitive market that exists today,
provided that regulation does not deny some vendors
an equal opportunity to compete.
Service quality regulation designed around traditional
landline service will force incumbent local exchange
carriers to operate and maintain legacy equipment,
restricting their ability to adopt efficient alternatives to
remain competitive. Service quality regulation
therefore has the potential to be anticompetitive and
harmful to consumers.
4. Eliminate Price Regulation
Requirements to offer similar terms to all customers
prevents incumbents from offering volume and term
discounts or other customized offerings which are
necessary to retain valuable customers who contribute
to the cost of maintaining service for everyone else.
The PSC is authorized to partially deregulate
competitive telecommunications services.41 In 2004,
the PSC suspended remaining price regulation of
business local exchange service throughout all of SBC’s
(now AT&T’s) local exchanges based upon a finding of
effective competition.42 The following year, the PSC
suspended rate regulation of residential local exchange
service in the Appleton, Beloit, Eau Claire, Fond du Lac,
Green Bay, Janesville, Kenosha, Madison, Manitowoc,
Menomonee Falls, Milwaukie, Neenah, Oshkosh,
Racine, Sheboygan, Stevens Point and Waukesha
exchanges.43
Pricing inflexibility makes it highly profitable to serve
customers in low cost areas and unprofitable to serve
customers in high cost areas. As a result, customers in
high cost areas have no competitive choices, and
customers in low cost areas pay artificially high prices
due to a pricing umbrella which permits competitors to
charge unreasonably high prices because the incumbent
is helpless to cut its prices selectively.
AB 696 and SB 469 would have eliminated the PSC’s
authority to oversee retail rates.
Allowing the market to set prices would spread the
benefits of competition in both urban and rural areas.
The alternative is to deny high-cost consumers of both
competitive choices and ultimately the heavily
subsidized service they need, as low-cost customers
take advantage of competitive offerings.
5. Require Parity Between Access Charges for
Intrastate and Interstate Services
Access charges are paid by long-distance and wireless
providers to local phone providers when calls are
exchanged between the providers. Access charges
historically were set far above cost to generate
significant subsidies for local service.
Subsidies of this nature cannot be maintained in a
competitive market where rivals can choose to serve
profitable customers and ignore everyone else. The
system is already breaking down, since VoIP and
wireless calls are assessed differently than traditional
phone calls and this has resulted in a lower cost and
thus a competitive advantage for those services.44
In Wisconsin, AT&T charges 1.5 cents per minute both
for interstate access and for intrastate access.45 But
intrastate access charges can be much higher for other
carriers.46 Three randomly selected rural providers
were each charging intrastate access rates which were
twice as high as their interstate access charges.
Pricing freedom would spread the
benefits of competition in both
urban and rural areas.
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Wisconsin Intrastate v. Interstate access charges
In cents
0
5
10
15
20
AT&T ILEC
"A"
ILEC
"B"
ILEC
"C"
Intrastate
Interstate
Sources: FCC, filed tariffs
Reducing intrastate access charges does not necessarily
mean forcing rural and residential consumers to pay
higher prices for basic service. Indirect subsidization
through intrastate access charges can be replaced with
an explicit funding mechanism into which all
competitors must contribute equitably and out of which
any competitor who wishes to serve a high-cost area
may receive adequate funding. This is the same
approach AB 696 and SB 469 proposed.
Under the two bills, providers would have had six
months to reduce intrastate access charges, if
necessary, so they do not exceed interstate access
rates. These providers would have been entitled to
recover certain portions of any reduction in revenue
from the state universal service fund.
Such a funding mechanism should be transitional, not
permanent. This is because providers in high-cost areas
in most cases can achieve significant efficiencies by
utilizing alternate technologies, such as fixed or mobile
wireless, VoIP or even possibly satellites.
It is not possible to preserve the status quo, nor is it
desirable to postpone reform. If incumbent
telecommunications providers are forced to charge or
pay inflated prices, they will lose customers to lower-
priced VoIP and wireless offerings. If they are required
to reduce intrastate access charges at least to the same
level as interstate access charges, they can provide a
more competitive offering.
6. Eliminate Filing Requirements
The requirement to file tariffs stating the rates, terms
and conditions ensures that rivals receive detailed
information about a competitor’s new or improved
products and services. This reduces the incentive to
consistently offer a superior value proposition as the
best defense against competitive surprises which may
cause a loss in sales.
The FCC concluded during the Clinton administration
that it would be pro-competitive to neither require nor
allow long-distance carriers to file tariffs. An absence of
any tariffs would increase incentives for innovation,
make it easier to offer discounts and customized service
arrangements as a way of retaining lucrative customers
– who contribute to the joint and common costs of
maintaining the network for the benefit of all
consumers – and reduce the possibility of tacit
coordination in price-setting.47
AB 696 and SB 469 would have eliminated the
requirement to file tariffs, but would have allowed
providers to file tariffs voluntarily. Ideally, both
mandatory and voluntary tariffs should be eliminated,
since even voluntary tariffs allow competitors to send
signals to one another.
7. Reform Obligations to Serve
Traditionally, the quid pro quo for a monopoly franchise
was the obligation to serve anybody upon reasonable
request. The federal Telecommunications Act of 1996
eliminated the monopoly franchise, but the obligation
to provide basic service remains.
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An obligation to serve imposes costs on some providers
that don’t have to be borne by others. It is
anticompetitive and should be eliminated wherever the
market is competitive and consumers can choose
between multiple providers.
Otherwise, providers should be allowed to satisfy their
provider of last resort obligation utilizing the most
efficient technology. For example, there may be
instances where it would be more economical to deploy
wireless or VoIP rather than traditional phone service.
AB 696 and SB 469 would have authorized the PSC to
grant waivers from the obligation to serve on a case-by-
case basis where a provider can demonstrate that the
waiver is in the public interest or that effective
competition exists for basic voice service in a particular
local exchange area. The bills would also have allowed
providers to utilize any available technology, which
actually encourages new technology deployment.
INVESTMENT LINKED TO REGULATORY
REFORM
Broadband investment is vital to promote equal
opportunity, create jobs in an uncertain economy as
well as improve education and health care.
The Wisconsin Technology Council estimates that $157
million in federal grants have been made pursuant to
the American Recovery and Reinvestment Act of 2009
for broadband projects fully inside Wisconsin, and
another $254 million in grants have been made for
broadband projects at least partially within Wisconsin.48
These grants, which are vital in remote areas that are
expensive for providers to serve, will leverage private
investment by companies such as TDS, notes Tom Still,
which has won 11 broadband grants to facilitate
investment in Wisconsin.
Experts foresee the need for continuing massive
investment by network operators in current and next
generation broadband capability. The overall
investment needed to make broadband at the fastest
speeds (100+ MB) ubiquitous would be $350 billion,
according to FCC staff.49
Historically, monopoly franchises ensured that
investments in telephone and cable networks could be
recovered. Today, with vibrant competition and rapidly
evolving technology, there is no guarantee that
investments in broadband will be profitable.
The investments necessary to build broadband
infrastructure are “inherently risky by their very
nature,” according to Debra J. Aron and Robert W.
Crandall, who caution that “[p]rojects with inherently
significant risk, as these are, would be especially
sensitive to regulatory risk.”50
“Rethinking regulatory barriers tied to the landline era
are part of Wisconsin’s overall effort to ensure that its
telecom systems are world-class and that all regions of
Wisconsin, from its major cities to its rural areas, have a
chance to compete in the 21st century marketplace,”
according to Tom Still of the Wisconsin Technology
Council.51
Legacy regulation creates artificial competitive
advantages and disadvantages, because
communications providers are subject to different
regulation depending on the technology they use and
their history. Unequal regulation restricts service
strategy flexibility and creativity needed to compete in
the Internet era.
Regulatory uncertainty – that is, the risk that even well-
intentioned regulation can have unintended
consequences – is another obstacle to private
investment in broadband. According to Robert W.
Crandall, Robert E. Litan and William Lehr,
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The virtuous cycle of capacity investments
leading to new services and competition which
in turn helps drive increased demand and traffic
which in turn leads to still more investment in
facilities risks being derailed if the firms
investing in such infrastructure cannot
reasonably expect to recover their economic
costs, including earning a fair, risk-adjusted
return on investment.52
Larry Cohen of the Communications Workers of
America has also said, “We depend on private capital to
invest in next-generation wireless and wireless
networks, and create and maintain jobs in the
industry.”53 Citing the $63 billion in investments made
by the top network providers in 2008, Cohen noted in
reaction to proposed new regulation at the federal level
that it is crucial that policymakers “support the right mix
of incentives to sustain and enhance these investments
that are so critical to America’s future.”
Regulatory reform is necessary for broadband providers
to maintain stock valuations necessary to attract
sufficient investment capital for broadband expansion.
Investors funded wireless expansion by the incumbent
telecommunications providers on the strength of their
landline business. Now telecommunications providers
require competitive market returns from both their
wireline and wireless operations so investors will back
their broadband expansion. Investors will back
broadband if they perceive it has the potential to make
money, rather than be forced to subsidize local services.
CREATE AND MAINTAIN JOBS
The main reason policymakers should undertake
regulatory reform is to attract new investment to the
communications sector so consumers can receive the
services they want at competitive prices. New
investment in telecom is necessary to deliver this result,
and the states that attract it will also reap the added
rewards of job creation and economic growth.
Every $5 billion invested in broadband infrastructure
would directly create 100,000 new jobs in the
telecommunications and information technology
industries alone in the year in which the spending
occurs, according to President Larry Cohen of the
Communications Workers of America.54
One analysis found that $10 billion of investment in one
year in broadband networks will support an estimated
498,000 new or retained jobs throughout the entire U.S.
economy for a year.55 These include direct jobs, such as
technicians to deploy broadband cable and equipment;
indirect jobs created to supply the materials; and
induced jobs, such as jobs in restaurants and retail
stores created as the newly employed or retained
workers spend their paychecks.
A study by the Brookings Institution found that 300,000
private non-farm jobs are created throughout the entire
economy for every one percentage point increase in
broadband penetration.56 The authors conclude that
employment in both manufacturing and services
industries (especially finance, education and health
care) is positively related to broadband penetration.
Another study by Connected Nation estimates that just
a 7 percent increase in broadband adoption – similar to
the higher household broadband adoption in Kentucky
versus national growth that was achieved by addressing
local supply and demand issues – would create or save
50,748 new jobs per year in Wisconsin.57
The Connected Nation Study also projects the following
additional benefits assuming a reasonably-achievable 7
percent increase in broadband in Wisconsin:
• $1,863,975,895 in direct annual income growth
• $12,308,818 in average annual health care costs
saved
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• 69,731,928 in average annual hours saved
• $615,732,922 in annual value of hours saved
• $120,871,181 in average annual mileage costs
saved
• 61,224,784 in average annual lbs. of CO2
emissions cut. 58
The total economic impact of accelerating broadband
access and use in Wisconsin is approximately $2.6
billion, according Connected Nation.59
Regulatory reform alone can make most if not all of
these benefits possible by stimulating private
investment and creating competitive pressure for
broadband providers to upgrade their services, reduce
prices or both. Conversely, the absence of regulatory
reform will make it harder to achieve these benefits
through other means, such as public subsidies.
PROMOTE ECONOMIC DEVELOPMENT AND
NEW EFFICIENCIES
Economists have found higher residential property
values and more jobs and businesses in communities
with broadband, particularly in smaller, more rural and
economically distressed areas.60 Wage and salary jobs,
as well as the number of proprietors, grew faster in
counties with early broadband Internet access.61
Predicted savings in health care are major and
mounting as an effect of broadband diagnosis,
monitoring and other services.62 Broadband can be
used in a variety of new ways, including the monitoring
of elderly, infirm, or individuals with disabilities at their
current residences or less expensive community health
care centers, and the delivery of medical care directly
through “telemedicine,” or two-way video
communication between patients and health care
providers. These benefits are estimated to accumulate
to at least $927 billion over 25 years (measured in 2005
dollars), which is equivalent to half of what the United
States currently spends annually for medical care for all
its citizens ($1.8 trillion).63
Estimates of the net consumer benefits from home
broadband are on the order of $32 billion per year.64
Further deployment of broadband infrastructure is
needed to ensure that all people of the United States
have access to broadband capability. According to FCC
Chairman Julius Genachowski, roughly 14 million
Americans and many small businesses do not have
access to broadband.65 He also estimates that more
than 100 million Americans do not have broadband
either because they cannot afford, do not know how to
use it, or are not aware of its potential benefits.66
EMPOWER UNDERSERVED COMMUNITIES
A report by the U.S. Department of Commerce points
out that broadband use at home varies significantly
across demographic groups.
Persons with high incomes, those who are
younger, Asians and Whites, the more highly-
educated, married couples, and the employed
tend to have higher rates of broadband use at
home. Conversely, persons with low incomes,
seniors, minorities, the less-educated, non-
family households, and the non-employed
tend to lag behind other groups in home
broadband use.67
A recent Pew Internet survey also finds demographic
variances in broadband adoption.68 It shows that 63
percent of white households have broadband,
compared to 52 percent black and 47 percent Hispanic
(English- and Spanish-speaking) households.69
Meanwhile, it also reveals that those who have
accessed the Internet wirelessly via their laptop or
handheld device were 62 percent Hispanic (English- and
Spanish-speaking) 59 percent black (non-Hispanic) and
52 percent white (non-Hispanic).70
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
12
The foregoing research tracks the findings of the
National Center for Health Statistics concerning wireless
substitution. It found that adults living in poverty
(36.3%) and adults living near poverty (29%) were more
likely than higher income adults (19.6%) to be living in
households with only wireless telephones.71 And
Hispanic adults (30.4%) and non-Hispanic black adults
(25%) were more likely than non-Hispanic white adults
(21%) to be living in households with only wireless
telephones.72
The popularity of mobile Internet access among
minority groups is helping to “close a looming digital
divide stemming from the high cost of in-home Internet
access, which can be prohibitive for some,” according to
a New York Times report.73
Another recent Pew survey found that from 2006 to
2008, internet use among Latino adults rose by 10
percentage points, from 54% to 64%. In comparison,
the rates for whites rose four percentage points, and
the rates for blacks rose only two percentage points
during that time period. Though Latinos continue to lag
behind whites, the gap in Internet use has shrunk
considerably.74
Access to broadband is becoming increasingly important
for employment, education, news, health care and
consumer welfare purposes, as FCC Commissioner
Mignon Clyburn recently noted.
In today’s fast-changing world, broadband is
not a luxury; but rather, it is a necessity, a must-
have. Need a job? You’ll have to go on-line for
that. Want to manage your energy consumption
at home? You’ll have to go on-line for that.
Applying for government benefits? Before long,
you will have to go exclusively on-line for that
too.
* * * *
Broadband’s key promise for people of color in
particular is economic empowerment. For the
first time, there are no immediate and
overwhelming barriers to entry for upstart
businessmen and women or “cyberpreneurs.”
Broadband has opened avenues never dreamed
possible by those in challenged communities.75
“We firmly believe that ubiquitous broadband access,
adoption, and use, stand to be great equalizers in our
society,” notes a joint policy statement of the National
Asian-Pacific American Caucus of State Legislators,
National Black Caucus of State Legislators, National
Caucus of Native American State Legislators and the
National Hispanic Caucus of State Legislators. “As such,
we must ensure that Internet adoption and use via a
broadband connection becomes engrained as a social,
cultural norm in our communities.”76
Every Wisconsin resident should have access to
broadband. Telephone companies, cable operators,
wireless providers and others are all anxious to invest in
broadband if investors will provide the funding.
Investors will decide whether firms can buy the
necessary equipment and employ the highly-skilled
people who can make it all work.
Of all the calculations that affect private investment,
regulation is the most critical from a state perspective.
If legacy telephone regulation is not reformed and the
possibility that other market participants could face
similar regulation is not eliminated, the private
investment needed to make broadband a practical
reality for every household is at risk.
Demographics of
Home Broadband Users
White, Non-Hispanic 63%
Black, Non-Hispanic 52%
Hispanic (English- and Spanish-speaking 47%
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
13
WISCONSIN’S NEIGHBORS
Other states have made significant strides reforming
outdated telecom regulation in the past year.
Indiana
Indiana legislators passed the most comprehensive set
of regulatory reforms in the country and Gov. Mitch
Daniels signed the bill into law in 2006. House Enrolled
Act 1279 eliminates hidden subsidies in intrastate
access charges, ends tariff filing requirements, permits
pricing flexibility, expressly provides that the state
commission does not have jurisdiction to regulate
competitive services, streamlines provider of last resort
regulation and assigns responsibility for consumer
protection and broadband deployment to other state
agencies. According to one of the bill’s co-authors, Rep.
Eric Koch,
We have seen expansion of rural broadband,
with AT&T, Verizon, and other providers
expanding high-speed Internet access to over
100 additional rural communities. More than
2,150 new jobs have been created by Comcast,
AT&T, and Verizon alone. Nearly $1.5 billion
has been invested in new telecommunication
infrastructure by AT&T (over $1 billion), Verizon
($300 million), Embarq ($18 million) and smaller
telephone companies (over $150 million).
Robust new competition has resulted in more
than 35 new state video franchises being issued
to seven cable companies and 10 traditional
telephone companies.77
Illinois
Gov. Pat Quinn signed legislation on June 15, 2010
which modernizes the Illinois Telecommuncations Act
by exempting broadband and VoIP services from utility
regulation, mandating parity between intrastate and
interstate access charges and eliminating regulation of
telecommunications services subject to competition.78
Michigan
Michigan updated its telecommunications laws in
2005.79 All services except primary basic residential
service have been detariffed. There is pricing flexibility
for all but primary basic residential service in Michigan.
And the state expressly exempts wireless and VoIP
services from state commission jurisdiction.
AT&T recently announced it has invested in excess of $2
billion in Michigan and created hundreds of new
positions around the state from the time the current
Michigan Telecommunications Act went into effect and
video franchise reform legislation was passed and
signed into law in 2006, through 2008.80
Ohio
Gov. Ted Strickland signed legislation on June 13, 2010
which updates Ohio’s telephone regulations. Senate Bill
162 exempts broadband, wireless and VoIP services
from most utility regulation, authorizes the utility
commission to reduce intrastate access charges on a
revenue-neutral basis, eliminates most utility regulation
of nonbasic telecommunications services and permits
providers to apply for a waiver of the requirement to
provide basic local exchange service under certain
circumstances.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
14
CONCLUSION
By simple reforms of outmoded laws, Wisconsin can
ignite a new spiral of innovation and revival based on
new technologies and services.
Anticompetitive tariffs, pricing regulation, hidden cross
subsidies, unequal consumer protection and provider-
of-last resort obligations are not in the public interest.
These things prevent telecommunications providers
from offering competitive services and generating
revenues for broadband expansion. They serve chiefly
as obstacles to investment that reduce asset values of
all telecom suppliers.
Legacy regulation restricts service strategy flexibility
and creativity needed for real competition in the
Internet age, even when pursued in the name of
“competition.”
By embracing regulatory reform, legislators will expand
customer choice, decrease prices, and ignite the
broadband expansion necessary to economic growth
and technological progress. We recommend that state
legislators give urgent consideration to the following
specific regulatory reforms:
• Allow full pricing freedom and reduce inflated
intrastate access charges so all providers can
compete.
• Eliminate filing requirements that give rivals
detailed information about a competitor’s new
or improved services or products.
• PSC jurisdiction to act on consumer complaints
should be eliminated and handled solely within
the Department of Justice's Office of Consumer
Protection and the Department of Agriculture,
Trade, and Consumer Protection.
• Eliminate service quality regulation, which
applies to some providers but not others is
therefore anticompetitive and harmful to
consumers.
• Terminate obligations to serve, which impose
costs on some providers but not others and are
anticompetitive wherever consumers can
choose between multiple providers.
These proposals all rest on the principle that all
providers of voice services should be subject to
minimum regulation which does not discriminate on the
basis of technology or history, just like in any
competitive market.
These reforms aren’t novel or unprecedented. In the
Midwest region alone, these reforms have already been
adopted in Indiana – and other neighboring states are
moving in the same direction.
This is a golden opportunity for Wisconsin to open up
new technological opportunities and economic
efficiencies that promise a direct private market
economic stimulus of at least $2.2 billion over the five
year period ending in 2012 and thereafter in the form of
lower prices for voice services, plus an additional $2.6
billion in economic impact annually from increased
broadband availability and use – including an estimated
50,748 jobs created or saved per year throughout the
state’s economy – according to Connected Nation. Jobs
are created or saved not only in the
telecommunications equipment and services, but also in
manufacturing and service industries (especially
finance, education and health care).
Broadband will provide unprecedented opportunities
for wealth creation in disadvantaged communities and
rural areas. Unfortunately broadband is not yet
ubiquitous, particularly in disadvantaged communities
and remote areas. Yet every Wisconsin resident should
have access to broadband.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
15
AUTHORS
Hance Haney is Director and a senior fellow of the Technology & Democracy Project at the Discovery Institute. He advised the
chairman of the Subcommittee on Communications of the United States Senate during the deliberations leading to the
Telecommunications Act of 1996. He subsequently held various positions with the United States Telecom Association, U S WEST,
Inc. and Qwest Communications.
George Gilder is a senior fellow at the Discovery Institute and the founder of Discovery’s Technology & Democracy Project. He is also
chairman of George Gilder Fund Management, LLC and moderator of the Gilder Telecosm Forum. His best-selling book, Microcosm
(1989), explored the quantum roots of new electronic technologies. A subsequent book, Life After Television (1990), was a prophecy
of the future of computers and telecommunications and a prelude to his book on the future of telecommunications, Telecosm
(2000).
The authors have previously assessed the state of competition and need for regulatory reform in Illinois, Indiana, Ohio, Michigan and
Wisconsin in a paper entitled “More Broadband, Increased Choice and Lower Prices Begin With Regulatory Reform,” Discovery
Institute (Aug. 2008) available at http://www.discovery.org/a/7371. A subsequent paper addresses the same issues in Alabama,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee, “Stimulate Broadband and Lower
Utility Bills With Regulatory Reform,” Discovery Institute (Feb. 2009) available at http://www.discovery.org/a/9241. Their most
recent paper, “Georgia's Unfinished Telecom Agenda: Regulatory Reform Would Grow Georgia's Economy," Discovery Institute (Jan.
2010) is available at http://www.discovery.org/a/13941.
The views expressed herein are those of the authors and do not necessarily reflect the views of the Discovery Institute or its directors
or staff.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
16
NOTES
1 Remarks of Alfred E. Kahn before the Federal Trade Commission (Feb. 13, 2007)
http://www.ftc.gov/opp/workshops/broadband/presentations/kahn.pdf. Kahn is the Robert Julius Thorne Professor of Political
Economy (Emeritus) at Cornell University who has also served as chairman of the New York Public Service Commission, chairman of
the Civil Aeronautics Board, Advisor to the President (Carter) on Inflation, and chairman of the Council on Wage and Price Stability.
2 “Local Telephone Competition: Status as of June 30, 2009,” Federal Communications Commission (Sept. 2010) available at
http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db0903/DOC-301310A1.pdf (Local Telephone Competition) at 29.
3 Id.
4 “Comcast Now the Third Largest Residential Phone Services Provider in the U.S.” Comcast (Mar. 11, 2009) available at
http://www.comcast.com/About/PressRelease/PressReleaseDetail.ashx?PRID=844.
5 “Comcast Reports Second Quarter 2010 Results,” (Jul. 28, 2010) available at
http://www.cmcsk.com/releasedetail.cfm?ReleaseID=493293.
6 http://www.cmcsk.com/phone.cfm.
7 “SNL Kagan Forecasts Rapid Shift in Competition of Residential Phone Service,” (Apr. 28, 2008) available at
http://www.snl.com/SNL-Financial/Press_Releases/20080428.aspx.
8 Local Telephone Competition, note 2 at 30.
9 In the Matter of Development of Nationwide Broadband Data to Evaluate Reasonable and Timely Deployment of Advanced
Services to All Americans, Improvement of Wireless Broadband Subscribership Data, and Development of Data on Interconnected
Voice over Internet Protocol (VoIP) Subscribership, WC Docket No. 07-38, Report and Order and Further Notice of Proposed
Rulemaking (rel. Jun. 12, 2008) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-89A1.pdf.
10 “Fiber-Optic Providers Are Leading Choices for Internet, Television, and Telephone Service,” Consumer Reports (Jan. 5, 2009)
available at http://pressroom.consumerreports.org/pressroom/2009/01/consumer-reports-fiber-optic-providers-are-leading-
choices-for-internet-television-and-telephone-service.html (“intense competition for cable and satellite customers between AT&T U-
verse and Verizon FiOS high speed fiber providers has driven down rates for Internet, phone and TV service and is likely the reason
that companies allow these savings to continue past the promotional period. In the past year, bundles of the three services have
dropped in price by up to 20 percent, to as low as $80 a month.”). See also: “Price War Erupts for High-Speed Internet Service,” by
Vishesh Kumar, Wall Street Journal (Sept. 2, 2008) available at http://online.wsj.com/article/SB122031009737388555.html.
11 “Save a bundle: How to piece together a great deal for TV, phone, and Internet service,” Consumer Reports (Feb. 2010) available
at http://www.consumerreports.org/cro/magazine-archive/2010/february/electronics-and-computers/bundling/overview/bundling-
ov.htm.
12 Bob Tedeschi, “Better Calling for Less, by Skipping the Cell Network,” New York Times (Feb. 10, 2010) available at
http://www.nytimes.com/2010/02/11/technology/personaltech/11smart.html; see also “Save a bundle: How to piece together a
great deal for TV, phone, and Internet service,” note 18 (“The best Voice over Internet Protocol (VoIP) services, which came from
providers of all types, rivaled fiber in offering the best phone service.”).
13 “Consumer Benefits from Cable-Telco Competition,” by Michael D. Pelcovits, Ph.D. and Daniel E. Haar (Nov. 2007) available at
http://www.micradc.com/news/publications/pdfs/Updated_MiCRA_Report_FINAL.pdf at 10, 24.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
17
14
Id., at 11.
15 Id., at 29 and 11.
16 Id., at 29 and 25.
17 Id., at 18-19.
18 Id., at 29.
19 Id.
20 In the Matter of Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis
of Competitive Market Conditions With Respect to Commercial Mobile Services, WT Docket No. 09-66, Fourteenth Report (rel. May
20, 2010) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-10-81A1.pdf, at 7, 18.
21 Stephen J. Blumberg and Julian V. Luke, “Wireless Substitution: Early Release of Estimates From the National Health Interview
Survey, January-June 2009 (Dec. 16, 2009) available at http://www.cdc.gov/nchs/data/nhis/earlyrelease/wireless200912.htm.
22 Id.
23 Dan Frommer, “CHART OF THE DAY: Almost A Third of U.S. Households Have Cut The Landline Cord (T, VZ, S),” San Francisco
Chronicle (Aug. 18, 2010) available at http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/08/18/businessinsider-chart-of-the-
day-almost-a-third-of-us-households-have-cut-the-landline-cord-2010-8.DTL.
24 “Cutting the cord,” The Economist (Aug. 13, 2009) available at
http://www.economist.com/opinion/displaystory.cfm?story_id=14214847.
25 Id.
26 Id.
27 Saul Hansell, “Verizon Boss Hangs Up on Landline Phone Business,” New York Times (Sept. 7, 2009) available at
http://bits.blogs.nytimes.com/2009/09/17/verizon-boss-hangs-up-on-landline-phone-business/.
28 Id.
29 Local Telephone Competition, note 2 at 19, 28.
30 Hundt, Reed E. You Say You Want a Revolution: A Story of Information Age Politics (Yale Univ. 2000) at 15 (“in the Omnibus Budget
Reconciliation Act, passed by Al Gore’s tie-breaking Senate vote, the Democratic Congress gave the FCC authority to dissolve this
oligopoly by auctioning new licenses”) and 98 (“by auctioning spectrum with no rules attached and preempting all state regulation,
we had totally deregulated the wireless industry.”)
31 Hundt at 170 (“Our intent was to communicate our great support for cable’s investment in renovating its systems. The 1996 law
had repealed rate regulation, effective in two years. That topic was behind us. Now cable had to take on the telephone industry.”).
32 Annual Report and Analysis of Competitive Market Conditions With Respect to Commercial Mobile Services, Federal
Communications Commission (rel. Jan. 16, 2009) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-09-54A1.pdf at
8.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
18
33
“Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (Second Annual Report),”
Federal Communications Commission (Dec. 11, 1995) (“We conclude that cable television systems remain the primary distributors of
multichannel video programming services and continue to enjoy market power in local markets, although some progress has begun
toward a competitive marketplace for the distribution of video programming. In the last year, DBS systems have attracted many
subscribers to newly available services ... In sum, while subscribership for distributors using alternative technologies has generally
increased over the last year, overall subscribership for all distributors using alternative technologies is just 9% of total multichannel
video programming distributor (“MVPD”) subscribership, whereas cable systems account for 91% of the total.”).
34 In the Matter of Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (MB Docket
No. 07-260), Comments of the National Cable & Telecommunications Association (May 20, 2009) available at
http://www.ncta.com/DocumentBinary.aspx?id=827 at 17.
35 Id.
36 Wis. Stat. § 196.202.
37 “Exploring the Digital Nation: Home Broadband Internet Adoption in the United States,” U.S. Dept. of Commerce (Nov. 2010)
available at http://www.ntia.doc.gov/reports/2010/ESA_NTIA_US_Broadband_Adoption_Report_11082010.pdf (Exploring the
Digital Divide) at 5, 17.
38 Id.
39 “FCC Needs to Improve Performance, Management and Strengthen Oversight of the High-Cost Program,” U.S. Government
Accountability Office, GAO-08-633 (Jun. 2008) available at http://www.gao.gov/new.items/d08633.pdf at 2-3
40 Jason W. Gingerich, “Tangled phone lines – Service complaints mount at Ameritech,” South Bend Tribune (Sept. 10, 2000) ($).
41 Wis. Stat. § 196.195.
42 “Petition of SBC for Suspension of Wisconsin Statute sec 196.196(1) With Regard to Small Business Customers,” Wisconsin PSC
Docket No. 6720-TI-173, Final Decision (Jun. 3, 2004).
43 “Petition of SBC Wisconsin for Suspension of Wisconsin Statute sec. 196.196(1) with Regard to Basic Local Exchange Service,”
Wisconsin PSC Docket No. 6720-TI-196, Final Decision (Nov. 25, 2005).
44 See, e.g., Hance Haney and George Gilder, “More Broadband, Increased Choice and Lower Prices Begin With Regulatory Reform,”
Discovery Institute (Aug. 2008) available at http://www.discovery.org/a/7371 at 13-16.
45 “Trends in Telephone Service,” Industry Analysis and Technology Division, Wireline Competition Bureau, Federal Communications
Commission (Sep. 2010) available at http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db0930/DOC-301823A1.pdf, at Table
1.4.
46 These examples reflect “total charges per conversation minute,” which include the four separate components of access charges:
originating access, terminating access, switched usage and switched non-usage. Regulators choose which category to assign various
costs. Sometimes regulators over-assign costs, and parties cite one or more categories of access charges as either desirable for a
particular social purpose or as unsustainable in a competitive market.
47 “In the Matter of Policy and Rules Concerning the Interstate, Interexchange Marketplace,” Second Report and Order, (rel. Oct. 31,
1996) available at http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1996/fcc96424.txt at paragraph 53 (“The record in this
proceeding supports our tentative conclusion that not permitting nondominant interexchange carriers to file tariffs for interstate,
domestic, interexchange services will promote competition in the market for such services. Even under existing streamlined tariff
filing procedures, requiring nondominant interexchange carriers to file tariffs for interstate, domestic, interexchange services
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
19
impedes vigorous competition in the market for such services by: (1) removing incentives for competitive price discounting; (2)
reducing or taking away carriers' ability to make rapid, efficient responses to changes in demand and cost; (3) imposing costs on
carriers that attempt to make new offerings; and (4) preventing consumers from seeking out or obtaining service arrangements
specifically tailored to their needs. Moreover, we believe that tacit coordination of prices for interstate, domestic, interexchange
services, to the extent it exists, will be more difficult if we eliminate tariffs, because price and service information about such
services provided by nondominant interexchange carriers would no longer be collected and available in one central location.”)
48 Tom Still, “While most stimulus money trickles out, broadband dollars find a faster pipeline,” WTN News (Sept. 27, 2010) available
at http://wistechnology.com/articles/7805/.
49 Commission Open Meeting Presentation on the Status of the Commission's Processes for Development of a National Broadband
Plan, Federal Communications Commission (Sept. 29, 2009) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
293742A1.pdf.
50 Robert W. Crandall and Debra J. Aron, Investment in Next Generation Networks and Wholesale Telecommunications Regulation
(Nov. 03, 2008) available at http://ssrn.com/abstract=1294910 at 27.
51 Tom Still, “In a changing world, Wisconsin’s telecom policies need to keep pace” (Mar. 8, 2010) available at
http://wisconsintechnologycouncil.com/newsroom/inside-wi/?ID=934.
52 “The Effects of Broadband Deployment on Output and Employment: A Cross-Sectional Analysis of U.S. Data,” see note 5 at 14-15.
53 Letter from Larry Cohen, President, Communications Workers of America to The Honorable Julius Genachowski, Chairman, Federal
Communications Commission (Oct. 15, 2009) available at http://fjallfoss.fcc.gov/ecfs/document/view?id=7020142161; see also
Prepared Remarks of Commissioner Mignon L. Clyburn, note 42 (“While some government money is and will be available to help
defray the cost of broadband and to support creative adoption programs, it is evident that we cannot do it all on our own.”).
54 National Broadband Strategy Call to Action, Communications Workers of America (Dec. 2, 2008) available at
http://www.cwa-union.org/news/national-broadband-strategy-call-to-action.html.
55 Robert D. Atkinson, Daniel Castro and Stephen J. Ezell “The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost
Productivity and Revitalize America,” Information Technology & Innovation Foundation (Jan. 2009) available at
http://www.itif.org/files/roadtorecovery.pdf.
56 Robert W. Crandall, Robert E. Litan and William Lehr, “The Effects of Broadband Deployment on Output and Employment: A Cross-
Sectional Analysis of U.S. Data,” Brookings Institution (Jun. 2007) available at
http://www.brookings.edu/papers/2007/06labor_crandall.aspx.
57 “The Economic Impact of Stimulating Broadband Nationally,” Connected Nation (Feb. 21, 2008) available at
http://www.connectednation.com/research/economic_impact_study/index.php at 8, 15-16.
58 Id., at 7.
59 “The Economic Impact of Stimulating Broadband Nationally,” Connected Nation ( Feb. 2008) available at
http://www.connectednation.com/research/economic_impact_study/.
60 Sharon Gillett , William H. Lehr, Carlos A. Osorio and Marvin A. Sirbu, “Measuring Broadband’s Economic Impact: Final Report
Prepared for the U.S. Department of Commerce, Economic Development Administration (Feb. 28, 2006) available at
http://www.eda.gov/ImageCache/EDAPublic/documents/pdfdocs2006/mitcmubbimpactreport_2epdf/v1/mitcmubbimpactreport.p
df.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
20
61
Peter Stenberg, Mitch Morehart, Dtephen Vogel, John Cromartie Vince Breneman and Dennis Brown, “Broadband Internet’s Value
for Rural America,” U.S. Department of Agriculture, Economic Research Report No. (ERR-78) (Aug. 2009) available at
http://www.ers.usda.gov/Publications/ERR78/.
62 Robert E. Litan, “Great Expectations: Potential Economic Benefits to the Nation From Accelerated Broadband Deployment to Older
Americans and Americans with Disabilities,” New Millennium Research Council (Dec. 2005) available at
http://www.newmillenniumresearch.org/archive/Litan_FINAL_120805.pdf.
63 Id,
64 Mark Dutz, Jonathan Orszag and Robert Willig, “The Substantial Consumer Benefits of Broadband Connectivity for U.S.
Households,” Compass Lexecon LLC (Jul. 2009) available at http://internetinnovation.org/library/special-reports/the-substantial-
consumer-benefits-of-broadband-connectivity-for-us-househol.
65 Julius Genachowski, “Broadband: Our Enduring Engine for Prosperity and Opportunity,” Federal Communications Commission
(Feb. 16, 2009) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-296262A1.pdf.
66 Id.
67 Exploring the Digital Nation, note 37 at 5.
68 Lee Rainie, “Internet, broadband, and cell phone statistics,” Pew Internet & American Life Project (Jan. 5, 2010) available
http://www.pewinternet.org/~/media//Files/Reports/2010/PIP_December09_update.pdf.
69 Id., at 4.
70 Id., at 6.
71 Note 27.
72 Id.
73 Jenna Wortham, “Mobile Internet Use Shrinks Digital Divide,” New York Times (Jul. 22, 2009) available at
http://bits.blogs.nytimes.com/2009/07/22/mobile-internet-use-shrinks-digital-divide.
74 Gretchen Livingston, Kim Parker and Susannah Fox, “Latinos Online, 2006-2008: Narrowing the Gap,” Pew Hispanic Center (Dec.
22, 2009) available at http://pewhispanic.org/files/reports/119.pdf.
75 Prepared Remarks of Commissioner Mignon L. Clyburn, MMTC Broadband and Social Justice Summit, John H. Johnson School of
Communications, Howard University (Jan. 22, 2010) available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-
295888A1.pdf.
76 “Towards Access, Adoption and Inclusion: A Call for Digital Equality and Broadband Opportunity,” National Asian Pacific American
Caucus of State Legislators, National Black Caucus of State Legislators, National Caucus of Native American State Legislators , and
National Hispanic Caucus of State Legislators (Dec. 2009) available at
http://thehispanicinstitute.net/files/u2/TAAI_MultiCaucus_Statement.pdf.
77 Rep. Eric Koch, “State Telecom Deregulation,” Inside ALEC (Nov./Dec. 2009) available at
http://www.alec.org/am/pdf/insidealec/state_telecom_deregulation.pdf.
78 Public Act 96-0927.
WISCONSIN TELECOM POLICY NEEDS UPDATE | NOVEMBER 2010
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79
Public Act 235 of 2005.
80 “AT&T Reaches Major Michigan Investment Milestone; Announces Plan to ADD More Than 40 New Cell Sites in 2009,” press
release (Apr. 1, 2009) available at http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=27128.